Tuesday, April 30, 2013

Financial Literacy Month: Changing My Financial Attitude

I've been watching The Suze Orman Show for a few years now, and credit her greatly for getting me on a better financial track. So I was surprised when I found myself disagreeing with her recently.

A caller asked whether or not they should use an account that had been gifted to them to pay off their credit cards. Suze's answer was based on interest rates, which, sure, makes financial sense, but I was surprised Suze didn't explore how the credit card debt had been incurred in the first place.

After having been there, done that, at least three times in the past 10 years, I know that just using a large chunk of money to pay off credit card debt doesn't mean I'll never incur credit card debt again.

And that's been the biggest change in my financial attitude recently.

As much as I've wanted to believe "never again," the biggest financial hurdle has been having to do things I never wanted to do again.

In November of last year, when I had to charge my car repairs again, I was thoroughly bummed out about it. Then, right after the holidays, I had to pay for my textbooks, another expensive item that could only be charged. I felt like I was right back where I had been three years ago, and that did not feel good at all.

It completely wiped out all the joy and freedom I'd felt just a month before, when slowly but surely, I paid down a balance the hard way...one paycheck at a time.

I started looking into second jobs or freelance work - not really viable when I only have about an hour to myself daily a few times a week. But then school started, I was busy with that and my non-profit stuff and work and kids, and I just resigned myself to being in credit card debt for the rest of my life.

I was pretty sure I'd be putting even more on the credit card during my trip last month, but then I came upon the Magic Little Notebook method. While I did take some out of my savings, I also took some out of other weekly budgeting items that I would not be needing since I was out of town, and came up with an overall budget, plus a daily spending plan for my 6 days away.

I would check my progress every night. The first day, I spent less than I had budgeted, which meant I could spend more for the rest of my trip. Same for the second day, and then again, the third. I went the entire week without incurring any credit card debt.

My progress is slow, for sure, but what's most important is getting used to not using the plastic crutch. And also changing my attitude so that if I do need to use it, I don't get completely bummed out and fall into a vicious overspending cycle.

Interestingly, on that same show, Suze said her show is more about relationships than just money. I totally agree. I am working on changing my relationship with money. I am working on feeling like I am in control of my credit card debt, rather than letting my debt control me. I am working on feeling powerful over my own paycheck, rather than feeling powerless over the money that goes out. I have long taken pride in being able to pay my bills on time, and now I can take pride in watching my savings (finally!) start to grow at the same time the credit card bills decrease. And, we shall see that, if the next time I have to use the plastic for a bill that's bigger than what I have, I can at least feel grateful that I have the credit card as an option.

There will always be those with a lot more than what we have, and I'm good at not trying to keep up with them. What I need to work on is recognizing that we have a lot more than others, and all things considered, we're doing pretty okay.

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